MUMBAI: The All India Gems and Jewellery Trade Federation (GJF) in its wishlist for the upcoming Union Budget, asked the Finance Minister to abolish 80:20 rule for gold import and cut import duty to 2 per cent.
The national trade federation for the promotion and growth of trade in gems and jewellery sector urged that the 80:20 rule for gold import, which allows only the nominated agencies to import gold on the condition that 20 per cent of the imported shipment will be exported, GJF Chairman Haresh Soni said in a statement.
"The 80:20 rule is the biggest impediment for smooth operations of imports and development of premiums on gold as the export relation to imports has no relevance and has built a big parallel economy," Soni said.
GJF also demanded from the government to bring down the import duty on gold imports to 2 per cent from current level of 10 per cent.
Bringing down customs duty will eliminate smuggling and remove involvement of any black money, he said.
In a 10-point pre-budget recommendation, Soni said, "We expect the new government to bring good days for the industry. Over the past one year the jewellery trade has suffered a lot because of 80:20 rule and 10 per cent import duty on gold."
Capping customs duty will help curb the growing black marketing activities in the trade, gold smuggling and high premium on gold and put an end to monopolised business environment, Soni said.
Making specific recommendations for the development of the jewellery sector, the federation recommended the government to earmark funds for development and expansion of the sector.
"The allocation of budgetary support to the tune of Rs 350 crore would go a long way to provide education and develop infrastructure facility for jewellery parks to rehabilitate craftsman working in unhygienic environments, and bring them into organised ambit," Soni said.
With favourable expectations from the government, GJF Director Ashok Minawala, said, "At present, the industry is suffering from several irrational taxes such as excise duty; tax collected at source, GST, wealth tax and high premium charges on gold from banks.
"We recommend that banks be allowed to freely issue gold loans capital requirement for industry and such gold loans be permitted to be paid back in 'gold metal or in cash'".
At present, loans must be paid back only in rupees. GJF also recommended maintenance of 10 per cent difference between import duties on finished gold/silver jewellery compared with raw material to discourage cheap low quality jewellery entering into Indian market.
While suggesting rationalisation of VAT across all states, federation demanded to abolish the wealth tax with immediate effect.